340 U.S.

76
71 S.Ct. 160
95 L.Ed. 89

UNITED STATES
v.
UNITED STATES GYPSUM CO. et al.
No. 30.
Argued and Submitted Oct. 19, 1950.
Decided Nov. 27, 1950.
Motion to Amend Denied Jan. 2, 1951.

See 340 U.S. 909, 71 S.Ct. 289.

Where summary decree was an adjudication of violation of the Sherman
Anti-Trust Act by concerted action of defendants through fixed-price
patent licenses, accepting as true the underlying facts in defendants' proof
by proffer, the government was entitled only to relief based on that finding
and the proffered facts. Sherman Anti-Trust Act, 14, 15 U.S.C.A.
14; Fed.Rules Civ.Proc. rule 56, 28 U.S.C.A.
[Syllabus from Pages 77-79 intentionally omitted]
Mr. Charles H. Weston, Washington, D.C., for appellant.
Mr. Bruce Bromley, New York City, for appellees United States Gypsum
Co. et al.
Mr. Norman A. Miller, Chicago, Ill., for appellee Certain-Teed Products
Corp.
Messrs. Andrew J. Dallstream, Chicago, Ill., Walter G. Moyle, Ralph P.
Wanlass, Washington, D.C., Albert E. Hallett, Chicago, Ill., for appellee
Celotex Corp.
Elmer E. Finck, Buffalo, N.Y., Joseph S. Rippey, Rochester, N.Y., David
I. Johnston, Oklahoma City, Okl., for appellees National Gypsum Co. et
al.

Mr. Justice REED delivered the opinion of the Court.

This proceeding was filed in 1940 in the District Court of the United States for
the District of Columbia by the United States under the authority of the
Attorney General. 15 U.S.C. 4, 15 U.S.C.A. 4. The complaint charged, 44,
a long-continued conspiracy by defendants in restraint of trade in gypsum
products among the several states and in the District of Columbia, and a similar
monopoly, all in violation of 1, 2 and 3 of the Sherman Anti-Trust Act, 26
Stat. 209, as amended, 15 U.S.C. 1, 2, 3, 15 U.S.C.A. 13. The
defendants, appellees here, were United States Gypsum Co., patentee, and
various other gypsum board manufacturers, its licensees, and certain of their
officers. It was alleged that the combination carried out its unlawful purposes as
indicated in the excerpt from the complaint quoted below.1 Civil relief, through
prohibitory and mandatory orders, was prayed in various appropriate forms.
After the United States concluded its evidence in chief at the trial, a three-judge
District Court, 15 U.S.C. 28, 15 U.S.C.A. 28, granted appellees' motion to
dismiss under Rule 41(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A.,
on the ground that no right to relief had been shown. 67 F.Supp. 397. On direct
appeal, 15 U.S.C. 29, 15 U.S.C.A. 29, we reversed the judgment of
dismissal March 8, 1948, United States v. United States Gypsum Co., 333 U.S.
364, 68 S.Ct. 525, 92 L.Ed. 746, and remanded the case to the District Court
for further proceedings in conformity with our opinion.

On remand a conference took place at the Government's suggestion. The Court

acted under procedure similar to pretrial, Rule 16, and its inherent power to
direct a case so as to aid in its disposition. As a result of that conference,
without objection from any party, the Government filed a motion for a
summary judgment under Rule 56 on the ground that there was no genuine
issue as to any material fact, and the appellees filed an offer of proof, directed at
matters as to which appellees were of the opinion a genuine issue existed. A
summary judgment, without other findings than those contained in the decree,
was entered November 7, 1949, on appellant's motion.2 Both plaintiff and
defendants took direct appeals from the decree to this Court. 15 U.S.C. 29, 15
U.S.C.A. 29. Defendants' appeal objected to summary judgment on the
ground of their right to introduce material evidence. That appeal was dismissed
by this Court. 339 U.S. 959, 70 S.Ct. 995. The reasons for our action lay in the
fact that our holding in our first opinion, 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed.
746, justified a summary judgment for plaintiff on the issue of the violation of
the Sherman Act when the record was considered in the light of our opinion
and defendants' offer of proof on the remand. This point is discussed later in
this opinion under subdivision I.

Probable jurisdiction was noted on the appeal of the United States. This is the
case we are now discussing. For the same reasons that we dismissed
defendants' appeal, this Court affirmed Article III of the District Court decree.
Our order also carried the sanction of an injunction against violation of the
decree, 'pending further order of this Court.' 339 U.S. 960, 70 S.Ct. 996.

The issues left for determination in this appeal are those raised by the United
States in its effort to have the provisions of the District Court decree enlarged.
It seeks to extend the injunctions against violations of the Sherman Act to cover
gypsum products instead of being limited to gypsum board as defined in the
decree; and to include clude interstate commerce generally instead of limiting
the territorial scope of the decree to the eastern portion of the United States. It
also seeks changes that forbid specific practices, in addition to price fixing,
such as standardizing products, classifying customers, or adopting delivered
price systems, all pursuant to the principal conspiracy. It seeks to compel
licensing of all patents by United States Gypsum; to empower the Department
of Justice to inspect certain records; to extend the decree's terms to cover
individual defendants; and to require the defendants to pay all costs.

I.
5

Procedure on remand.In determining the present issues, it is necessary to

consider the trial court's solution of the procedural problems presented by our
remand. Our decree was a reversal of the trial court's dismissal of the complaint
on the merits at the completion of plaintiff's, the United States', presentation of
its evidence. In our opinion, 333 U.S. 364, 389, 68 S.Ct. 525, 539, 92 L.Ed.
746, we said that 'the industry-wide license agreements, entered into with
knowledge on the part of licensor and licensees of the adherence of others, with
the control over prices and methods of distribution through the agreements and
the bulletins, were sufficient to establish a prima facie case of conspiracy.'

We said that the intention of United States Gypsum and its licensees to act in
concert to attain the purpose of the conspiracy, restraint of trade and monopoly,
was apparent from the face of the license agreements. 333 U.S. at pages 389,
400, 68 S.Ct. at pages 539, 544, 92 L.Ed. 746, 'The licensor was to fix
minimum prices binding both on itself and its licensees; the royalty was to be
measured by a percentage of the value of all gypsum products, patented or
unpatented; the license could not be transferred without the licensor's consent;
the licensee opened its books of accounts to the licensor; the licensee was
protected against competition with more favorable licenses and there was a
cancellation clause for failure to live up to the arrangements.'

We stressed the acting in concert as differentiating the case from United States
v. General Electric Co., 272 U.S. 476, 47 S.Ct. 192, 71 L.Ed. 362, discussed on
pages 400 and 401 of 333 U.S., pages 544 and 545 of 68 S.Ct., 92 L.Ed. 746,
the concert of action being established by the favored licensee clause of the
standard license agreement. 333 U.S. at 410, 68 S.Ct. 548, 92 L.Ed. 746.3 In
United States v. Line Material Co., 333 U.S. 287, 68 S.Ct. 550, 92 L.Ed. 701,
decided the same day as the Gypsum case, the opinion of the Court discussed
the then standing of the General Eelctric rule as follows: 'We are thus called
upon to make an adjustment between the lawful restraint on trade of the patent
monopoly and the illegal restraint prohibited broadly by the Sherman Act. That
adjustment has already reached the point, as the precedents now stand, that a
patentee may validly license a competitor to make and vend with a price
limitation under the General Electric case and that the grant of patent rights is
the limit of freedom from competition * * *.' 333 U.S. at page 310, 68 S.Ct. at
page 562, 92 L.Ed. 701.

We added, 333 U.S. at pages 311 and 312, 68 S.Ct. at pages 562 and 563, 92
L.Ed. 746, that while the General Electric rule permitted a patentee to fix the
price the licensee of patents may charge for the device, separate patent owners
could not combine the patents and thus reach an agreement to fix the price for
themselves and their licensees. There was no holding in our first opinion in
Gypsum that mere multiple licensing violated the Sherman Act.4 The facts and
the language placed our judgment squarely on the basis that 'it would be
sufficient to show that the defendants, constituting all former competitors in an
entire industry, had acted in concert to restrain commerce in an entire industry
under patent licenses in order to organize the industry and stabilize prices.' 333
U.S. at page 401, 68 S.Ct. at page 545, 92 L.Ed. 746.5

As appears from the preliminary statement of its decree, the trial court acted on
that understanding of our holding. See Appendix, 340 U.S. 96, 71 S.Ct. 173. It
was not necessary to reach the issue as to whether a mere plurality of licenses,
each containing a price-fixing provision, violates the Sherman Act. It is not
necessary now.

10

The reference, 333 U.S. at page 389, 68 S.Ct. at page 539, 92 L.Ed. 746, to the
establishment of a prima facie case of conspiracy by conscious industry concert
in price fixing was directed at the basis for the admission of the separate
declarations of alleged conspirators. 333 U.S. Section V, at pages 399402, 68
S.Ct. at pages 543545, 92 L.Ed. 746, of the opinion, however, contains our
determination that an industry's concerted price fixing by license violates the
Sherman Act per se. United States v. Paramount Pictures, 334 U.S. 131, 143, 68

S.Ct. 915, 922, 92 L.Ed. 1260.

11

Of course, when we remanded the case of the District Court the defendants had
the right to introduce any evidence that they might have as to why all or any
one of them should be found not to have violated the Sherman Act. Our
reference at 333 U.S. 402, footnote 20, 68 S.Ct. 545, 92 L.Ed. 746, to
Gulbenkian v. Gulbenkian, 2 Cir., 147 F.2d 173, shows that. See Federal
Deposit Ins. Corp. v. Mason, 3 Cir., 115 F.2d 548, 552; Bowles v. Biberman
Bros., 3 Cir., 152 F.2d 700, 705. Furthermore, even though defendants had no
substantial evidence to overcome the prima facie conclusion of Sherman Act
violation, they had the right to lay facts before the court that were pertinent to
the court's decision on the terms of the decree; for example, the purpose of the
concerted action, or the reason for making new patents available to the
licensees, or willingness to license all applicants for the patent privilege. Such
rights, however, did not require the trial court to admit evidence that would not
affect the outcome of the proceedings. They did not affect the power of the trial
court to direct the progress of the case in such a way as to avoid a waste of time.

12

A summary judgment, under Rule 56, was a permissible on remand. It was

allowed, as the last paragraph of the preliminary statement of the decree shows,
on the court's understanding that our opinion 'held that the defendants acted in
concert to restrain trade and commerce in the gypsum board industry and
monopolized said trade and commerce among the several states in that section
hereinafter referred to as the eastern territory of the United States * * *.' As
heretofore explained, that conclusion followed from our decision, if no
evidence that controverted our ruling was offered. It is therefore necessary to
examine briefly the offer of evidence.

13

The offer contained sixty-two paragraphs of proposed evidence. A full

exposition is impracticable. Stress was laid on the available evidence to rebut
our finding of an industry plan to stabilize prices.6 Evidence was offered to
show the licenses were for settlement of alleged infringements, and individual
in character and were not used as a subterfuge to gain price control. Such
evidence would not affect our determination, set out above, that price-fixing
licenses made in knowing concert by standardized price requirements violated
the Sherman Act by their very existence.

14

Defendants offered to prove that royalties based on unpatented gypsum board

were compensation for patent licenses and installment payment for prior
infringement damages. Such proof would not affect the fact that such a royalty
added to the cost of producing unpatented board.

15

16

Proof was offered that covenants against transfer of licenses, for price
maintenance and for equality of license terms, and bulletin orders against
rebates by selling other products at a cheaper price when patented articles were
sold, were to protect the licensor's monopoly under its letters patent. It was
offered to prove that the activities of the Board Survey Company, considered in
our former opinion, 333 U.S. 364, 400, 68 S.Ct. 525, 544, 92 L.Ed. 746, were
to secure compliance with the licenses; that there was no agreement to
eliminate jobbers but only a purpose to maintain patent prices by discontinuing
the jobber's discount. Such proof, in view of our holding as to the Sherman Act,
would not make legal concerted action under patents to stabilize prices. We
pass over other offers of proof as clearly immaterial on the issue of liability for
Sherman Act violation. Good intentions, proceeding under plans designed
solely for the purpose of exploiting patents, are no defense against a charge of
violation by admitted concerted action to fix prices for a producer's products,
whether or not those products are validly patented devices. We do not think
that, accepting the offers of fact as true, there is enough in the proffered
evidence to change the actions of the defendants from the illegal to the
permissible. A finding that the manufacturers did not violate the Sherman Act
under the evidence introduced by the Government and that proffered by the
defendants below would be clearly erroneous in view of the concert of action to
fix industry prices by the terms of the licenses.7
We agree with a statement made by counsel for the Government in argument
below that as a 'matter of formulating the decree' many facts offered to be
proven would have effect upon the conclusion of a court as to the decree's
terms. However, we read the preliminary statement of the District Court to the
decree and the summary decree itself as an adjudication of violation of the
Sherman Act by the action in concert of the defendants through the fixed-price
licenses, accepting as true the underlying facts in defendants' proof by proffer.
The trial judges understood the summary judgment to be, as Judge Stephens
said, 'limited to that one undisputed question.' Judge Garrett and Judge Jackson
agreed.8 That conclusion entitled the Government only to relief based on that
finding and the proffered facts. On that basis we dismissed United States
Gypsum's appeal from the decree, and on that basis we examine the
Government's objection to the decree.

II.
17

The Government's proposed amendments to the decree.A trial court upon a

finding of a conspiracy in restraint of trade and a monopoly has the duty to
compel action by the conspirators that will, so far as practicable, cure the ill
effects of the illegal conduct, and assure the public freedom from its

continuance. Such action is not limited to prohibition of the proven means by

which the evil was accomplished, but may range broadly through practices
connected with acts actually found to be illegal.9 Acts entirely proper when
viewed alone may be prohibited.10 The conspirators should, so far as
practicable, be denied future benefits from their forbidden conduct.
18

The determination of the scope of the decree to accomplish its purpose is

peculiarly the responsibility of the trial court. Its opportunity to know the
record and to appraise the need for prohibitions or affirmative actions normally
exceeds that of any reviewing court. This has been repeatedly recognized by
us.11 Notwithstanding our adherence to trial court responsibility in the molding
of a decree as the wisest practice and the most productive of good results, we
have never treated that power as one of dsicretion, subject only to reversal for
gross abuse. Rather we have felt an obligation to intervene in this most
significant phase of the case when we concluded there were inappropriate
provisions in the decree.12 In resolving doubts as to the desirability of including
provisions designed to restore future freedom of trade, courts should give
weight to the fact of conviction as well as the circumstances under which the
illegal acts occur.13 Acts in disregard of law call for repression by sterner
measures than where the steps could reasonably have been thought permissible.
We turn then to the Government's proposals for modification of the decree on
the assumption that only a violation through concerted industry license
agreements has been proven, but recognizing, as is conceded by defendants, that
relief, to be effective, must go beyond the narrow limits of the proven violation.

19

(a) There is one change acceptable to the Government and United States
Gypsum and which we think desirable. Article II, 3, of the decree defines
gypsum board as 'made from gypsum and embodying any of the inventions or
improvements set forth and claimed in any of the Patents.' This is too
restrictive, and the words 'and embodying any of the inventions or
improvements set forth and claimed in any of the Patents' should be stricken, if
the definition is used.

20

(b) The Government accepts the finding of Article III of the decree but objects
to Article V (2) and (3) because, read together, they allow agreements through
price fixing by license between United States Gypsum and Pacific Coast
licensees. The complaint of Sherman Act violation was restricted to the eastern
territory of the United States. The evidence applied only to that area. However,
the close similarity between interstate commerce violations of the Sherman Act
in eastern territory and western territory seems sufficient to justify the
enlargement of the geographical scope of the decree to include all interstate
commerce. Article V of the Government's proposed decree indicates one way

in which this extension could be accomplished.

21

(c) The Government asks an extension of the decree to include all gypsum
products instead of patented gypsum board alone. Compare Appendix, Art. V.
The license agreements, as indicated above, required royalties on unpatented
open edge gypsum board. Board Survey, the organization created to enforce the
license agreements, found possibilities of price evasion to exist by a licensee's
cutting prevailing prices on other commodities, sold in conjunction with
patented gypsum board. Bulletins, issued to standarize sale practices, criticized
rebates as violative of the license agreements. 333 U.S. 364, 386, 68 S.Ct. 525,
537, 92 L.Ed. 746. Defendants' offer of proof did not deny such effort to
systematize sales. Their explanation was that the efforts were to enforce
legitimate license agreements and were not calculated steps in conspiracy or
monopoly. We think the Government's request that the decree's injunctions
reach gypsum products, as defined in its proposed decree, is reasonable and
should be allowed. See U.S. proposed decree, Article II, 4, and Article V.

22

(d) The Government asks that the decree forbid standardization of trade
practices through concerted agreement. Our former Gypsum opinion, 333 U.S.
at pages 382383, 68 S.Ct. at pages 535, 536, 92 L.Ed. 746, gives a summary
of the methods adopted. Another method of regulating sales was by special
provision for certain classes of customers, jobbers and manufacturing
distributors. See 333 U.S. at pages 397 and 399, n. 18, 68 S.Ct. at pages 543
and 544, 92 L.Ed. 746. We think this would justify the Government's requests.
Article V, 3, 4 and 6.

23

(e) The Government asks the insertion of Article V, 5, directed at an

agreement for concerted action in selling or quoting products at prices
calculated according to a delivered price system. It points out that such a system
was said by this Court, 333 U.S. at page 382, 68 S.Ct. at page 535, 92 L.Ed.
746, to have been employed, and no proffer of contrary proof has been made.

24

Defendants argue as follows: 'The price for the patented product was 'the
lowest combination of mill price and rail freight from mill to destination.'
Defendants urge that 'The only witness at the trial who was interrogated about
it said that the pricing system in the gypsum board industry was the very
opposite of the basing point system; that the mill base prices were extended to
all mills; and that it was really only a freight equalization method of pricing
which resulted in the customer always getting the lowest possible price no
matter from whom he bought.'

25

And they say 'It was not established by the license bulletins, but licensor, in

25

And they say 'It was not established by the license bulletins, but licensor, in
stating the minimum price, merely used the method of pricing as it then
existed.'

26

Further, defendants point out 'If appellee companies are to be questioned as to

their method of pricing, they should be afforded a full hearing for the
presentation of all pertinent matters bearing upon their pricing practices and
should not be called upon to defend themselves in a summary hearing for an
alleged contempt of court.'

27

We think the defendants are unduly apprehensive. The Government's proposed

prohibition of delivered price arrangements is directed at concerted action, by
agreement or understanding among the manufacturers, not at any system of
pricing the individual manufacturer may adopt or any price that he may make.14
Since the conspiracy for restraint of trade was furthered by this arrangement,
use of such a method should be banned for the future. To avoid any possibility
that an individual's meeting of competitors' prices would be construed as a
contempt of the decree, we think proposed Article V, 5 should read as
follows: '5. Agreeing upon any plan of selling or quoting gypsum products at
prices calculated or determined pursuant to a delivered price plan which results
in identical prices or price quotations at given points of sales or quotation by
defendants using such plan;' (f) The Government objects to Article VI of the
decree which provides, 1, for compulsory licensing for 90 days to any
applicant of all then-owned patents relating to gypsum board at not to exceed
the standardized royalties as theretofore charged to defendant licensees. The
objection is that the limited time makes the requirement futile except for
present licensees. There is a corollary objection to Article VIII because of
provisions in the approved license agreements. Particular reference is made by
the Government to an approved provision requiring the licensee to report its
monthly sales and price with right to Gypsum to have an inspection by a
certified public accountant approved by the parties. The Government fears the
competitive advantage to Gypsum of knowing its competitors' sales and prices,
and the depressive effect of such information on a strenuous sales program by
the licensee.

28

The Government suggests expanding the requirement of licensing to include all

United States Gypsum patents, old and new, with a provision by which new
patents may be excluded after five years. See proposed decree, Art. VI, 6.
Other proposed changes require all licensees to receive equal treatment as to
royalties, put the burden of establishing royalty values on United States
Gypsum and allow a licensee to attack the validity of patents.

29

In United States v. National Lead Co., 332 U.S. 319, 335351, 67 S.Ct. 1634,

29

In United States v. National Lead Co., 332 U.S. 319, 335351, 67 S.Ct. 1634,
16411649, 91 L.Ed. 2077, we recently dealt with problems of licenses and
royalties after a finding of Sherman Act violation. The arrangements on account
of which the companies manufacturing titanium pigments in that combination
were adjudged violators were as offensive to the prohibitions of the Sherman
Act as those proven in the present case. Depending largely upon the discretion
of the trial court, we refused to modify the decree. It ordered the accused patent
owners to license all patents controlled by them concerning titanium and
titanium manufactures during the succeeding five years at a reasonable royalty
to be fixed by the Court. Paragraphs 4 and 7 of that decree, 332 U.S. at 335
337, 67 S.Ct. 16411642, 91 L.Ed. 2077.

30

The terms of the National Lead decree are somewhat like those the
Government asks here. In the present case there should be no requirement of
reciprocal grants. 332 U.S. 336, 67 S.Ct. 1642, 91 L.Ed. 2077.

31

We think that the United States Gypsum Company should be required to license
all its patents in the gypsum products field to all applicants on equal terms.
Whether the term for compulsory licensing of new patents is to be five years, or
for a longer period with the privilege to the appellees to move for a limitation
for such new patents, as provided in the suggested decree, Art. VI, 6, we
leave to the District Court. That court should provide for its determination of a
reasonable royalty either in each instance of failure to agree or by an approved
form or by any other plan in its discretion.

32

We disapprove the Government's suggestion that the burden of establishing the

reasonableness of the requested royalty should be placed upon Gypsum by the
decree. We do not decide where the burden of proof of value lies or who has
the duty to go forward with the evidence in any particular instance.

33

We disapprove the Government's suggestion, contained in Article VI, 5, that

the decree shall not be taken as preventing an 'applicant' (we construe this as
meaning licensee) attacking the patent or as importing value to it. We see no
occasion for this unusual provision and think it should be entirely omitted.15

34

We direct that Article VI of the decree be so modified as generally to conform

to the above suggestions.

35

We approve the Government's suggested provisions for inspection of licensees'

books and reports to licensor, substantially as set out in proposed Article VI,
2(c).

36

(g) The Government seeks access to the records and personnel of the
defendants for the purpose of advising itself as to the defendants' compliance
with the judgment. See proposed Article VIII. Construing the article as we did
in United States v. Bausch & Lomb Optical Co., 321 U.S. 707, 725, n. 6, 64
S.Ct. 805, 814, 88 L.Ed. 1024, we think the request reasonable. This article, or
one of similar import, should be included in the decree.

37

(h) We have noted in Government's contentions in regard to the individual

defendants, Avery, Knode, Baker, Ebsary and Tomkins, and its suggestion that
Article III be modified so as to read 'defendants' in the first line, instead of
'defendant companies.' It is true that these individuals signed the questioned
agreements, but they were acting as officials and we think the provisions of
Article V bar them from engaging in similar conspiracies.

38

(i) The Government asks that all costs be taxed against the defendant
companies. Article IX, proposed decree; Article X, decree entered. We see no
reason to interfere with the discretion of the trial court in this matter.

39

'With these general suggestions, the details and form of the injunction can be
more satisfactorily determined by the District Court.'16 Its procedure for the
settlement of a decree is more flexible than ours. The decree is reversed and the
cause remanded to the District Court for further proceedings in conformity with
this opinion.

40

Reversed.

41

Mr. Justice BLACK believes that all the amendments proposed by the
Government to Article VI of the decree are necessary to protect the public from
a continuation of monopolistic practices by United States Gypsum.

42

Mr. Justice JACKSON and Mr. Justice CLARK took no part in the
consideration or decision of this case.

APPENDIX.
43
District Court Decree of November 7, 1949.
44
Preliminary Statement.
45
46

This cause came on for trial before this Court on November 15, 1943. At the
conclusion of plaintiff's presentation of the case, defendants moved, pursuant to

Rule 41(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A., for judgment
dismissing the complaint on its merits. The motion of defendants was granted
August 6, 1946. The judgment so rendered by this Court was reversed by the
Supreme Court of the United States, and the case was remanded to this Court
for further proceedings in conformity with the opinion of the Supreme Court,
333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746.
47

Following the remand, the plaintiff, pursuant to Rule 56 of the Federal Rules of
Civil Procedure, moved for summary judgment in its favor upon the pleadings
and all of the proceedings which theretofore had been had in the case, or, in the
alternative, for such further proceedings as this Court might direct, and
defendants, by direction of the Court, filed proffers of proof.

48

Argument by counsel for the respective parties upon the motion of plaintiff was
heard by the Court, and after due consideration of such argument and of
defendants' proffers of proof, Garrett, J. and Jackson, J., constituting a majority
of the Court, announced a ruling to the effect that plaintiff's motion for
summary judgment would be granted, and Stephens, J., who presided during
the trial, announced his dissent from such ruling.

49

Thereafter counsel for plaintiff and counsel for certain of the defendants
submitted forms of final decrees for the consideration of the Court and also
suggested findings of fact, the latter to be considered in the event the Court
should deem it necessary to make any findings of fact additional to those
originally found by it and to those stated in the opinion of the Supreme Court.

50

In due course, the Court heard arguments respecting the proposed decrees and
the suggested findings of fact, and full consideration has been given thereto and
to all prior proceedings all being considered in the light of the decision of the
Supreme Court which, as understood by the majority of this Court, held that the
defendants acted in concert to restrain trade and commerce in the gypsum board
industry and monopolized said trade and commerce among the several states in
that section hereinafter referred to as the eastern territory of the United States,
which section embraces all the states of the United States westward from the
eastern coast thereof to the Rocky Mountains and including New Mexico,
Colorado, Wyoming, and the eastern half of Montana.

'45. Said combination has been formed, has been carried out, and is being
carried out by each of the defendant companies (acting, in part, through those of
their officers and directors made defendants herein) and by other companies

hereinafter referred to engaged in the manufacture of said gypsum products.

Said companies have entered into, have carried out, and are carrying out said
combination for the purpose, and with the effect, of restraining, dominating,
and controlling the manufacture and distribution of said gypsum products in the
Eastern area by:
'(a) Concertedly raising and fixing at arbitrary and noncompetitive levels the
prices of gypsum board manufactured and sold by said companies in the
Eastern area;
'(b) concertedly standardizing gypsum board and its method of production by
limiting the manufacture of board to uniform methods, and by producing only
uniform kinds of board, for the purpose, and with the effect, of eliminating
competition arising from variations in methods of production and in kinds of
board manufactured and distributed in the Eastern area;
'(c) concertedly raising, maintaining, and stabilizing the general level of prices
for plaster and miscellaneous gypsum products manufactured and sold by said
companies in the Eastern area;
'(d) concertedly refraining from distributing gypsum board, plaster, and
miscellaneous gypsum products manufactured by said companies through
jobbers in the Eastern area, and concertedly refusing to sell said products to
jobbers at prices below said companies' prices to dealers, for the purpose, and
with the effect, of eliminating substantially all jobbers from the distribution of
said gypsum products in the Eastern area;
'(e) concertedly inducing and coercing manufacturing distributors to resell, at
the prices raised and fixed by said companies as aforesaid, gypsum board
purchased from said companies.'
2

The pertinent portions of the decree as entered below are set out in an appendix
to this opinion, 340 U.S. 96, 71 S.Ct. 173, in parallel columns with portions of
the decree proposed by the Government in its brief here. This proposal is more
limited than the Government's proposed decree offered in the District Court.

Exhibit A and paragraph 4 referred to on 333 U.S. at page 410, 68 S.Ct. at page
548, 92 L.Ed. 746, contain the licenses involved in this litigation.

The dissenters in Line (333 U.S. 287, 68 S.Ct. 583) joined in the United States
Gypsum opinion, since the concerted action in the United States Gypsum case
was thought to violate the Sherman Act, despite their view that the mere
multiplication of licenses, as in Line, 'produces a repetition of the same issue
(as in General Electric) rather than a different issue.' 333 U.S. 354, 68 S.Ct.

583.
5

Gypsum's petition for rehearing sought a modification of this position. It

argued that 'separate but similar lawful agreements must still be lawful if the
result is lawful and no preliminary agreements or understanding to make them
could be unlawful.' We denied rehearing. 333 U.S. 869, 68 S.Ct. 788, 92 L.Ed.
1147.

E.g., '1. There was no agreement or understanding between the United States
Gypsum Company (USG), patentee, and the other defendants or any of them
that they would associate themselves in a plan to blanket the industry under
patent licenses and stabilize prices or issue or cause to be issued substantially
identical licenses to all of the defendants or any number of them.'

One of the defendants, Celotex Corporation, made a separate proffer of proof,

indicating that it was the purchaser of a license from a licensee, American
Gypsum Company. In the transfer, Celotex assumed the licensee's obligations
to maintain the licensor's price. As Celotex took no other part in the conspiracy,
it contends that the decree should not impose upon it any further restriction
than a prohibition against price maintenance. Since Celotex entered into the
conspiracy by its purchase of the license with an agreement to operate in
accordance with its terms, we think it should be treated in the decree like the
other licensees.

At the hearing on proper terms for the decree Judge Garrett said, 'Judge
Jackson and I thought that, within the limits of the decision of the Supreme
Court, that decree should of course be granted and that nothing that was given
us in the proffer of proof would change the attitude of the Supreme Court
within the scope of those matters upon which it had specifically passed.
'Now, that was the summary judgment.'

Ethyl Gasoline Corp. v. United States, 309 U.S. 436, 461, 60 S.Ct. 618, 627, 84
L.Ed. 852; Hartford-Empire Co. v. United States, 323 U.S. 386, 409, 65 S.Ct.
373, 385, 89 L.Ed. 322; International Salt Co. v. United States, 332 U.S. 392,
401, 68 S.Ct. 12, 17, 92 L.Ed. 20.

10

United States v. Bausch & Lomb Optical Co., 321 U.S. 707, 724, 64 S.Ct. 805,
814, 88 L.Ed. 1024.

11

Associated Press v. United States, 326 U.S. 1, 22, 65 S.Ct. 1416, 1425, 89
L.Ed. 2013; cf. International Salt Co. v. United States, 332 U.S. 392, 399401,
68 S.Ct. Ct. 12, 1617, 92 L.Ed. 20. And see United States v. Crescent
Amusement Co., 323 U.S. 173, 185, 65 S.Ct. 254, 260, 89 L.Ed. 160.

12

Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 7882, 31 S.Ct.
502, 523524, 55 L.Ed. 619; United States v. American Tobacco Co., 221
U.S. 106, 184188, 31 S.Ct. 632, 650 651, 55 L.Ed. 663; United States v.
Crescent Amusement Co., 323 U.S. 173, 185187, 65 S.Ct. 254, 260, 261, 89
L.Ed. 160; note especially Hartford-Empire Co. v. United States, 323 U.S. 386,
409 435, 65 S.Ct. 373, 385389, 89 L.Ed. 322.

13

Local 167, I.B.T. v. United States, 291 U.S. 293, 299, 54 S.Ct. 396, 399, 78
L.Ed. 804; Hartford-Empire Co. v. United States, 323 U.S. 386, 409, 65 S.Ct.
373, 385, 89 L.Ed. 322.

14

See our discussion in Federal Trade Comm'n v. Cement Institute, 333 U.S. 683,
727728, 68 S.Ct. 793, 816, 92 L.Ed. 1009.

15

Sola Electric Co. v. Jefferson Electric Co., 317 U.S. 173, 63 S.Ct. 172, 87
L.Ed. 165; Edward Katzinger Co. v. Chicago Metallic Mfg. Co., 329 U.S. 394,
67 S.Ct. 416, 91 L.Ed. 374; MacGregor v. Westinghouse Electric & Mfg. Co.,
329 U.S. 402, 67 S.Ct. 421, 424, 91 L.Ed. 380; and cf. Scott Paper Co. v.
Marcalus Mfg. Co., 326 U.S. 249, 66 S.Ct. 101, 90 L.Ed. 47.

16

Warner & Co. v. Eli Lilly & Co., 265 U.S. 526, 533, 44 S.Ct. 615, 618, 68
L.Ed. 1161.